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    Pakistan Competitiveness and Logistics Challenges

    Presented by Moin Malik, Chief Executive

    22 November 2!!

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    "eographic #vervie$

    ― Pakistan is located at a strategic andimportant location at the cross%roads of&outh 'sia, the Middle East and Central'sia(

    ― )t has !,*+ km coastline along the'rabian &ea and "ulf of #man in the&outh(

    ― Pakistan has great potential for trade $ithlandlocked Central 'sian &tates,'fghanistan for the 'fghan ransit radeand to the $est and north into China, viathe -arakoram high$ay(

    ― here is a common border of !+kilometer bet$een Pakistan . )ndia(

    / ' study by Peterson )nstitute for )nternational Economics 0P))E1 gravitymodel, sho$s the potential of formal trade bet$een )ndia and Pakistan isroughly 2 times greater than recorded trade(

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    Logistics . transport impediments in &outh 'sia

    ― )n recent years, Pakistans gro$th of imports has far

    outpaced gro$th of exports, resulting in a large andgro$ing trade deficit(

    ― 3efusal to allo$ overland routes to third countries is ama4or impediment to regional trade(

    ― Long cargo d$ell times, limited implementation of transitagreements, and high transit costs are 4ust some of the

    trade constraints that hinder movement of goods(

    ―  Customs and border procedures are not oriented tofacilitate trade $here as in sufficient infrastructure addon to the problems(

    ― 5igh costs and d$ell times have contributed to

    unauthori6ed cross border trade(

    ― Pakistan lacks solid trade relationship $ith its large andeconomically dynamic neighbors.

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    Pakistan can become 'sia7s trade, energy and transport corridor

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    Source: World Bank – LPI 2010

    Pakistans Logistics performance indicators

    Indicator DescriptionPakistanrank

    (out of

    155)

    #ver all LP) #ver all Logistics performance scores !!

    Customs Efficiency of clearance process !8*

    )nfrastructure 9uality of trade and transport related infrastructure !2

    Logistics Competence Competence of :uality of logistics !2

    imeliness imeliness of shipments in reaching destinations !!

    racking . racing 'bility to track and trace consignments ;8

    )nternational &hipments Ease of arranging competitively priced shipments ++

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    Emerging markets Logistics index

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    Logistics infrastructure in Pakistan

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    &ea Ports

    ― Port traffic in Pakistan gro$s at < percent annually in recent years(

    ― $o ma4or ports, Port -arachi and Port 9asim, handle ;= percent of all

    international trade(

    ― Port "a$adar, operated by &ingapore Port 'uthority, is aiming todevelop into a central energy port in the region( )f fully operational theport $ill be in competition $ith the other ports in the region likeChabahar port in )ran, as $ell as >ubai in the ?nited 'rab Emirates(

    ― he local road infrastructure is insufficient and depleted( he need is toconstruct ma4or ne$ motor$ays and high$ays linking ports to main

    urban and industrial centers(

    'irports

    ― here are 8+ operational airports( -arachi is Pakistans mainairport but significant levels of both domestic and internationalcargo are also handled at )slamabad and Lahore(

    ―Pakistan )nternational 'irlines 0P)'1, the ma4or public sector airline,is facing the competition from a fe$ private airlines(

    ― Poor infrastructure, lack of proper storage, racking .temperature%controlled facilities are lacking even at the ma4or'irports(

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     Trucking― 3oad transport is the backbone of Pakistan7s transport system, accounting

    for ;+ percent of freight movement(

    ― Currently there is a fleet of over (2 million trucks plying on the roads(

    ― he technology of over ;+@ fleet consists of rigid suspension of old .obsolete Aedford trucks out of $hich about +B@ are 2 . 8 axle rigid trucks,

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    Challenges

    !( "overnment policies

    )nconsistent "overnment policies D No Progress on the great initiativeof NC)P(

    2( 3ising cost of fuel . electricity

    / Electricity . fuel cost are the ma4or components of logistics operatingcost $hich is continuously rising(

    8( inancing facilities

    5igh interest rates vs( Profit returns and high risk on credit in thisvulnerable market is a challenge for this highly capital intensiveproduct(

    ?navailability of financial arrangement from government in terms ofsoft loans or tax relaxation to boost this industry(

    *( )nefficient transport sector

    'lthough the transport sector is functional, its inefficiencies $ith long$aiting and traveling times, high costs, and lo$ reliability are draggingthe country7s economic gro$th(

    he poor performance of the sector is estimated to cost the economy*%+ percent of ">P each year(

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    Challenges F

    =( 5uman 3esource

    Limited local technical expertise , capacity building re:uired interms of trained 5uman 3esources

    +( >isintegrated transport function

    >isintegrated ransport and Logistics unctions D N5', Post #ffice,Communications and Ports and &hipping(

    B( Legislation

    / Pakistan7s regulations are not in line of the )nternational AestPracticesG $e are still follo$ing Carriage of "oods by &ea, 3oad and'ir 'ct of !;2= and Aill of Lading la$ of !

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    Challenges F

    !( Limited local infrastructure

    Lack of re:uired infrastructure for an efficient supply chainsystem

    !!( Lack of cold storage facilities

    /  'round 8@ % 8=@ of our perishable products gets $astedbased on the inefficiency of the cold chain(

    / Poor infrastructure, lack of temperature%controlled storagefacilities and processing centers at 'irports, &eaports and closerto production base

    !2( echnical kno$ledge

    /  Lack of '$areness of the )ncoterms and )nternational AestPractices $ith no optimi6ation and benefits of )mporting on #Aor Ex%$orks basis(

     

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    Opportunities

    !( "eographic Location

    ― Pakistan7s geographical location can make it a strong 5ubfor the flo$ through traffic bet$een 'sia and Europe(

    ― #ur strategic pro4ect of "'H'>'3 Port can make us anobvious choice I market as logistics 5ub to cater fortransit trade to and from 'fghanistan, C)& and HesternChina(

    2( 'ttractive consumer market

    ― Hith the rising population and consumer market of over!eclaring andproviding re:uired infrastructure for Pakistan7s Port to bea transshipment 5ub offering 'ir I&ea or &ea I'irfacilities can bring a lot of savings for our exports .imports(

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    Opportunities

    *( )ncreasing a$areness for 8PLs

    "ro$ing market and a$areness of the outsourcessupply chain services D business to concentrate ontheir core products I functions

     =( rucking sector

    ―  rucking sector has great potential for moderni6ationof trucking industry

    +( 'gro based economy

    ―  &trong 'griculture base has high export marketpotential for "ulf I Middle East, particularly for ruits,>airy and Live &tock

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    Recommendations

    ― "overnment should encourage investor friendly financing arrangements . policies enabling moreorgani6ed players to enter into this market(

    NC)P should be implemented completely $ith the approx( expected saving of ?&> =M per annum D!(8*@ of the value of )mports and Exports and (*=@ of ">P(

    )ntegrated multi%model net$orks and enhanced Ports facilities $ill lead to a unified and integratednet$ork $here goods can move efficiently, thus reducing the cost of transportation(

    rained manpo$er to manage speciali6ed tasks( Need is to build the capacity of the industry7s $orkforce( P)' has established certified training courses on freight for$arding % ho$ever this needs to befurther enhanced(

    Necessary legislations to meet the re:uirement of "lobal rade and improvement on LP)s(

    "overnment and rade bodies should accept reight or$arding as a proper industry and shouldoptimi6e on their capabilities(

    ?nified Ministry of ransport and Logistics should be established integrating all function including 'ir,&ea, 3oad ransportation, Ports and &hipping and trade facilitation(

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    hank you